Factors Affecting the Cost and Profitability of Arthroscopic Rotator Cuff Repair

Abstract

To examine the cost metrics and profitability of rotator cuff repairs (RCRs) in a large health care system. A retrospective study was performed using value analysis team data from 2 hospitals within a large metropolitan health system from 2010 to 2014. Cost and profit metrics were collected and compared against surgeon volume, surgeon subspecialty training, implant costs, Current Procedural Terminology (CPT) coding, length of stay, and hospital site. A total of 5,899 RCRs were identified with a mean contribution margin of $2,133. Surgical supplies were the largest contributor to direct costs. Hospital site also significantly affected contribution margin ($1,912 at hospital 1 vs $3,129 at hospital 2, P < .001). The number of billed CPT codes was not significantly correlated to contribution margin; however, significant differences were noted in contribution margin and direct cost associated with different CPT code combinations, with arthroscopic RCR with subacromial decompression and distal clavicle excision being the most profitable, at an average contribution margin of $2,147. There was no correlation between surgeon volume and contribution margin or direct cost. Our overall findings show that improvement in the profitability of arthroscopic RCR for hospital systems is possible, both by examining institutions' direct costs and by providing individual surgeons with cost breakdowns and contribution margin information to improve the profitability of their practice. Level IV, economic and decision analysis.